The Nakamoto upgrade will play a crucial role in the Ordinal's growth by fostering the components such as:

Reduced block times

The Nakamoto upgrade reduces the time needed to create Stacks blocks significantly. Here, the existing block time, which is about 10 minutes (due to being coupled with Bitcoin), can be brought down to approximately five seconds following the update.

Stacks can benefit from the faster block times as their block production is not tied to the Bitcoin blocks after the update. Moreover, this detachment from the Bitcoin block also reduces the time to confirm Slacks transactions.  

The Proof of Transfer (PoX) consensus mechanism helps Slacks achieve this reduced block times. Here, miners use the stacking method, where STX tokens are locked up to produce and secure the Stack blocks.

Nakamoto upgrade started rolling out on April 22, 2024, at Bitcoin block 840,360 in a two-step process.  The total number of Ordinal inscriptions on the day Nakamoto started to roll out was over 66 million. This inscription rate is rising with time, indicating the positive impact of this upgrade on Ordinals.

The rise in Ordinal inscriptions has caused congestion on the Bitcoin network, leading to energy demands, slower transaction speeds, and higher fees. Due to its limited block size and decentralized nature, storing images or data directly on the Bitcoin chain also carries a premium. Only the most valuable or important data should be stored on Bitcoin L1.

The Nakamoto upgrade with reduced block speed facilitates the Bitcoin NFT community to opt for Stacks NFTs, reducing the burden on the Bitcoin mainnet while supporting the parallel growth of Ordinals. 

The increased block speed solves one of the biggest challenges Stacks users and developers face. Improved block time with the Nakamoto upgrade can translate to faster transactions and greater adoption of Ordinals.

Improved security 

With the Nakamoto upgrade, Stacks aims to make its network as secure as Bitcoin's while ensuring near-instant block finality. Implementing 100% Bitcoin finality safeguards the reversal of Stacks transactions, guaranteeing their reliability and immutability.

Before Nakamoto, Stacks functioned under its security budget. The history of Stacks chains was considered to finalize the Stacks transactions. However, this finalizing process carried security risks as an attacker could potentially rewrite the transaction history by outspending the Stacks miners.

Nakamoto upgrade prevents Stacks from forking independently and mandates miners to build at the protocol level. This upgrade prevents the attacker from changing the history and makes Stacks transactions irreversible and as final as Bitcoin transactions. 

The global investment firm Franklin Templeton posted on X supporting Ordinals and Bitcoin's layer 2 solutions, mentioning their importance in addressing Bitcoin's economic security problems and increasing BTC's utility from a mere store of value. Acceptance from financial giants will be vital for Ordinals to grow towards the next level. 

This implementation of 100% finality enables the nodes to participate in the Bitcoin network's inherent security framework. This improved security feature safeguards the Stacks' network against potential attacks, making it safer for users and developers. 

The strengthened security after the implementation also facilitates users' interest in Ordinals. With this upgrade, Ordinals also gains security, adding more trust from the NFT community and leading to its growth. 

Newer Ordinal use cases 

Nakamoto's upgrade improves scalability, block speed, and security, resulting in an overall hassle-free developer experience. The increase in speed of the block times paves the way for adding blockheight parameters within the smart contracts. Nakamoto upgrade uses Clarity-version 3 to address the increased block speed.

A fast-emerging fascinating use case is the idea of Bitcoin-based Decentralized Autonomous Organizations (DAOs).

By enabling the inscription of arbitrary data onto individual satoshis, Ordinals can represent membership tokens, voting rights, or even the rules and logic that govern the DAO's operations.

The total number of decentralized autonomous organizations (DAOs) surpassed 50,000 as of June 2024, with a total treasury valued at over $28 billion. With the Nakamoto upgrade, developers can now confidently start working on the untapped Bitcoin DAO space to expand the potential of the Bitcoin ecosystem.

Developers can build DAO projects that require users to hold Ordinal NFTs and STX tokens to become members. This collaborative approach helps to foster the growth of Ordinals, Stacks, and Bitcoin DAOs. 

The improved developer-friendly interface and tools help attract more developers to join and create Bitcoin-based projects. The increase in the Bitcoin-based developer community will, in turn, help boost the growth of the Ordinals and the Bitcoin ecosystem. 

Improved incentivization 

With the rollout of the Nakamoto upgrade, Bitcoin’s incentive structure has also been updated, benefiting multiple actors. These include:

• Stackers: As a vital part of the Stack’s consensus mechanism and helping improve security, stackers are eligible for more rewards after the update. 

• Miners: The Nakamoto upgrade has reshaped miners' incentives beyond transaction fees. The new sorting process enables fair bidding and consistent participation, encouraging active engagement in the network.

• Node Operators: Faster block times add more responsibility and incentives to node operators. Operators now need to streamline and upgrade their operational capacity to manage the network's improved efficiency after Nakamoto. 

  
  

Following the Nakamoto upgrade, these increased incentives will play a crucial role in bringing more stackers, miners, and node operators into the Bitcoin ecosystem. As the Stacks ecosystem continues to expand and evolve, Ordinals are poised to benefit from the increased accessibility and growth of Bitcoin DeFi.